On appeal from: [2011] EWCA Civ 1156

These appeals raised questions about the availability of cross-border tax relief and the method of quantifying such relief. M&S claimed group relief in respect of losses sustained by two of their subsidiaries resident in Germany and Belgium respectively. These claims were refused by HMRC, and M&S contended that UK legislative provisions relating to this matter were contrary to art 43 EC (now art 49 TFEU) on the freedom of establishment.

The Supreme Court gave judgment on the first of five issues raised in May 2013. In this judgment the Court unanimously dismissed all remaining appeals. M&S could make sequential claims for the same losses in respect of the same accounting period – there was nothing in the Finance Act 1998, Schedule 18 Part VIII to support the conclusion that only one claim could be made. The legislation must also be construed so as to ensure that European Community law rights are effective, in the sense that they are not practically impossible to exercise.

The correct method for calculating the losses available to be surrendered begins by applying the local rules to determine whether there is a loss in a particular period and, if so, the amount of the loss that remained unutilised. The unutilised loss is then converted to UK principles. However, in the present case the relevant pay and file claims were held to be time barred.

For judgment, please download: [2014] UKSC 11
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII